4 ms·

I don't think anyone's going around using shares of Citibank stock as currency, are they? Because that's one of the many criteria that need to be true for that

I don't think anyone's going around using shares of Citibank stock as currency, are they? Because that's one of the many criteria that need to be true for that comparison to make any sense. Blows my mind because stablecoins could be so easy-- hold some cash and hold some US treasuries. Pocket the interest. Become rich.

jpmattia 4y ago
> hold some cash and hold some US treasuries. Pocket the interest. Become rich. Not getting what you're saying here: Only banks should have that privilege?
- dfdaffg423rag 4y ago
  I'm saying, if you're making a US dollar backed stablecoin, you could do it with minimal risk and still profit handsomely by just holding US treasuries. Instead, we have stablecoins backed by all sorts of things like commercial paper in cryptocurrency exchanges.
  - namdnay 4y ago
    Who is going to put their money in a stable coin paying 0.2% interest when the guy next door is offering 20%? Answer:anyone sane, but they wouldn’t be there in the first place
- JumpCrisscross 4y ago
  > Only banks should have that privilege? Yes, in exchange for the privilege of money creation you need tight regulations and public disclosures. Banking left unregulated turns into this mess time and time again. You'd think people would be more disciplined about betting private money creators. But they aren't. They never are. Particularly not when their neighbor is showing orders of magnitudes of paper gains. This was true in antiquity. It was true in our era of free banking. It's proven true, again, in crypto.
  - jpmattia 4y ago
    > Banking left unregulated turns into this mess time and time again. And yet, regulated banking also turns into a mess time and time again.
    - deleted 4y ago
      [deleted]
    - threeseed 4y ago
      Depends on your country. In Australia, our banks are among the most regulated and survived through the GFC with barely a scratch. Regulation is proven to work in the financial system. You just need to make sure you have enough of it which often the US hasn't. But in recent years that has been fixed up. Also it's a false comparison. There is one Tether and tens of thousands of banks.
    - vkou 4y ago
      Into a mess for who? Depositors? Could you summarize how much money depositors across the entire United States lost to bank busts over the past, say 40 years? And how does it stand up, compared to the crypto-of-the-month scams, losses, and exchange busts?
      - jpmattia 4y ago
        > Could you summarize how much money depositors across the entire United States lost to bank busts over the past, say 40 years? Nominal or actual? Just the Federal Savings and Loan crisis + the TARP bailouts were billions from the dilution of dollars. And that's just the US.
        vkou 4y ago
        The FSL crisis was caused by wild-west deregulation, accounting practices which have since been banned, and resulted in a thousand convictions. The crypto space is repeating all the same bullet points, except with more outright fraud, with less accounting, and without any convictions.
mountainofdeath 4y ago
Money Market funds already do this and the collapse of money market funds is usually a harbinger of worse things to come. Money market funds are non-FDIC insured places to park short term cash, typically backed by some combination of AAA commercial paper, municipal bonds and various vintages of T-Bills. Some also are exclusively holding California and New York City bonds and are are totally tax free. Money market funds can do things like suspending redemption in case of a panic to let things settle. The idea behind USDC is to collateralize it 1:1 like a money market fund provided the underlying bonds hold. Tether is doing fractional reserve banking but has no central bank to act as a lender of last resort. Even then, banks pay into the FDIC which retains reserves itself like any other insurance. Tether works as long as the money flowing in >= money flowing out. A severe run on Tether would dry up liquidity very quickly.

jpmattia 4y ago

> hold some cash and hold some US treasuries. Pocket the interest. Become rich. Not getting what you're saying here: Only banks should have that privilege?

dfdaffg423rag 4y ago
I'm saying, if you're making a US dollar backed stablecoin, you could do it with minimal risk and still profit handsomely by just holding US treasuries. Instead, we have stablecoins backed by all sorts of things like commercial paper in cryptocurrency exchanges.
- namdnay 4y ago
  Who is going to put their money in a stable coin paying 0.2% interest when the guy next door is offering 20%? Answer:anyone sane, but they wouldn’t be there in the first place
JumpCrisscross 4y ago
> Only banks should have that privilege? Yes, in exchange for the privilege of money creation you need tight regulations and public disclosures. Banking left unregulated turns into this mess time and time again. You'd think people would be more disciplined about betting private money creators. But they aren't. They never are. Particularly not when their neighbor is showing orders of magnitudes of paper gains. This was true in antiquity. It was true in our era of free banking. It's proven true, again, in crypto.
- jpmattia 4y ago
  > Banking left unregulated turns into this mess time and time again. And yet, regulated banking also turns into a mess time and time again.
  - deleted 4y ago
    [deleted]
  - threeseed 4y ago
    Depends on your country. In Australia, our banks are among the most regulated and survived through the GFC with barely a scratch. Regulation is proven to work in the financial system. You just need to make sure you have enough of it which often the US hasn't. But in recent years that has been fixed up. Also it's a false comparison. There is one Tether and tens of thousands of banks.
  - vkou 4y ago
    Into a mess for who? Depositors? Could you summarize how much money depositors across the entire United States lost to bank busts over the past, say 40 years? And how does it stand up, compared to the crypto-of-the-month scams, losses, and exchange busts?
    - jpmattia 4y ago
      > Could you summarize how much money depositors across the entire United States lost to bank busts over the past, say 40 years? Nominal or actual? Just the Federal Savings and Loan crisis + the TARP bailouts were billions from the dilution of dollars. And that's just the US.
      - vkou 4y ago
        The FSL crisis was caused by wild-west deregulation, accounting practices which have since been banned, and resulted in a thousand convictions. The crypto space is repeating all the same bullet points, except with more outright fraud, with less accounting, and without any convictions.

mountainofdeath 4y ago

Money Market funds already do this and the collapse of money market funds is usually a harbinger of worse things to come. Money market funds are non-FDIC insured places to park short term cash, typically backed by some combination of AAA commercial paper, municipal bonds and various vintages of T-Bills. Some also are exclusively holding California and New York City bonds and are are totally tax free. Money market funds can do things like suspending redemption in case of a panic to let things settle. The idea behind USDC is to collateralize it 1:1 like a money market fund provided the underlying bonds hold. Tether is doing fractional reserve banking but has no central bank to act as a lender of last resort. Even then, banks pay into the FDIC which retains reserves itself like any other insurance. Tether works as long as the money flowing in >= money flowing out. A severe run on Tether would dry up liquidity very quickly.